UK moves to bring crypto under full financial regulation by 2027
The UK government is preparing sweeping new rules that would place cryptocurrencies under the same regulatory framework as traditional financial products such as stocks and shares. The changes, expected to take effect in 2027, are designed to strengthen consumer protection and curb illicit activity in the fast-growing digital asset market.
The Treasury is currently drafting legislation that would require crypto firms to meet clear regulatory standards overseen by the Financial Conduct Authority (FCA). This would bring exchanges, wallet providers, and other crypto service companies fully into the UK’s financial “regulatory perimeter” for the first time.
Why the government is stepping in
Cryptocurrencies have surged in popularity as both an investment and a payment method, but they have largely operated outside the rules that govern mainstream financial products. As a result, consumers often lack the same protections they would have when dealing with regulated assets.
According to the government, the new framework aims to:
- Improve transparency across the crypto industry
- Boost consumer confidence
- Make it easier to detect fraud, enforce sanctions, and hold bad actors accountable
Chancellor Rachel Reeves said the move is essential for maintaining the UK’s global financial standing in a digital world.
“Bringing crypto into the regulatory perimeter is a crucial step in securing the UK’s position as a world-leading financial centre,” she said. “Clear rules will help firms invest and innovate, while protecting consumers and shutting out rogue operators.”
What will change for crypto firms
At present, crypto companies that fall under money-laundering rules must register with the FCA. Under the proposed reforms, far more crypto-related services would be regulated in the same way as other financial products, including being subject to strict disclosure and transparency standards.
Lucy Rigby, the City minister, said the goal is to make the UK an attractive and predictable environment for crypto businesses.
“These new rules will give firms the clarity and consistency they need to plan for the long term,” she said.
Crackdown follows scams and market turmoil
The push for tighter oversight comes amid growing concern over crypto-related fraud. Banking data released in October showed that losses from investment scams in the UK jumped 55% year-on-year, with fake cryptocurrency schemes believed to be the most common.
The issue has been highlighted by high-profile criminal cases, including the conviction of Zhimin Qian, also known as Yadi Zhang. Qian orchestrated a large-scale fraud in China that affected over 128,000 victims. UK authorities later seized more than 61,000 bitcoins, now worth over £5 billion, in what police believe is the largest single crypto seizure ever.
Political donations under scrutiny
Ministers are also considering a ban on political donations made in cryptocurrency, citing concerns about tracing the source and ownership of funds.
The issue gained attention after Reform UK, led by Nigel Farage, became the first British political party to accept crypto donations. While the party says it applies enhanced checks, critics argue that crypto donations pose unique transparency risks.
The debate intensified after Reform UK received £9 million from crypto investor Christopher Harborne—the largest donation ever made by a living individual to a UK political party.
What this means going forward
If passed, the new rules would mark a turning point for crypto in the UK—bringing digital assets firmly into the same regulatory environment as traditional finance. Supporters say this could legitimize the industry and protect consumers, while critics warn it may increase compliance costs and limit innovation.
Either way, the UK is signaling that the era of lightly regulated crypto markets is coming to an end.
Disclaimer:
This is a rewritten summary for informational purposes only. The original article was published on https://www.theguardian.com/
